This was a wonderful series. I’ve been a bit despondent about the sometimes lack of genuine policy rigor in some leftist spaces, so it’s awesome to see someone do the hard work. I’m not a leftist my self, but reading the series, the tax changes seem to not only make sense, but we be significantly better and less distortionary than the one we have now. Of course, LVT is everyone’s darling, but the corporation section was a revelation. Thanks!
PS, you might hate this, but Ylesisas wrote a little about taxes, and his broad outline looked a lot like yours: VAT, LVT, removing most tax deductions. Good policy is good policy!
I really liked this series, i was just curious if this has an answer for buy, borrow, die? I suspect the expenditure tax would still be weak against people borrowing against their untaxable wealth. since investments are not taxed.
"A big, non-cost, reason tax expenditures are bad is that the rich are disproportionate beneficiaries. Tax expenditures affect income tax liability, and most Americans pay very little, if any, income tax."
Did you mean to say that last part out loud.? The standard "left' narrative is that the rich don't pay their fair share, but here you are saying that even after the tax expenditures, the rich still pay most of the taxes.
Two big tax expenditures you did not mention...
Mortgage interest deduction: Pours gasoline on the fire of a housing market where supply is constrained due to restrictive zoning and other NIMBY inspired policies.
Tax exemption of employer health benefits: Perhaps well-intended but has the effect of tying us to our employers for a one-size-fits-all health plan that will get disrupted if we lose or change jobs. (and if I was already sick now I have a "preexisting condition"). Let me have a higher cash salary instead and I'll shop around for the health plan that best meets my needs and will stay with me if I change jobs.
The 1986 bipartisan tax reform lowered rates in exchange for closing loopholes. Capital gains was taxed as ordinary income. Since then, we have backslid to higher rates and more complexity.
Of course, the best "scorched earth" solution would be to replace all existing taxes with the Land Value Tax.
Can you talk a little more about “fair share?” From my understanding, the top 10% of earners pay over 76% of taxes and in comparison to most of our European counterparts, American tax system is extremely progressive
I'm making a conceptual argument. I don't think it follows from "the rich pay [most][a plurality] of [insert tax] therefore, they need not pay anymore." Of course, it *could* be the case the rich pay too much in tax, but I don't think we've hit that upper limit yet, especially not with the types of taxes I proposed in this series.
Regarding the claim that the rich in America pay a higher proportion of taxes than in Europe, that is in large part because U.S. income and wealth inequality is so high.
The second paragraph isn’t the reason. Europe genuinely taxes across the population distribution significantly more. I often wonder if people really understand the breadth of European taxes they have to sustain a welfare state.
The US could sustain probably 10% of gdp tax increase (it’s at 24% of GDP), and returning to the tax levels of the 90s is probs a start
I fully understand the breadth of the tax burden in Europe.
However, you might be under estimating the level of income and wealth inequality in the U.S. Europe at large, though I’d agree relative to Europe the U.S. has a less broad based tax code (which is bad).
I think wealth inequality in the US is often times over exaggerated in the sense that it’s pretax roughly the same as France, Germany, and the UK (https://ourworldindata.org/grapher/inequality-of-incomes-before-and-after-taxes-and-transfers-scatter?tab=table). The difference post taxes most maps out to the level of redistribution/taxes those countries do after the fact (which makes sense that the US would have a 25% higher post tax gini coefficient while also taxing roughly 25% less).
I think we both agreee we should raise taxes more on the wealth and expand the tax base but I’m not sure how you sell that politically
This was a wonderful series. I’ve been a bit despondent about the sometimes lack of genuine policy rigor in some leftist spaces, so it’s awesome to see someone do the hard work. I’m not a leftist my self, but reading the series, the tax changes seem to not only make sense, but we be significantly better and less distortionary than the one we have now. Of course, LVT is everyone’s darling, but the corporation section was a revelation. Thanks!
PS, you might hate this, but Ylesisas wrote a little about taxes, and his broad outline looked a lot like yours: VAT, LVT, removing most tax deductions. Good policy is good policy!
I really liked this series, i was just curious if this has an answer for buy, borrow, die? I suspect the expenditure tax would still be weak against people borrowing against their untaxable wealth. since investments are not taxed.
"A big, non-cost, reason tax expenditures are bad is that the rich are disproportionate beneficiaries. Tax expenditures affect income tax liability, and most Americans pay very little, if any, income tax."
Did you mean to say that last part out loud.? The standard "left' narrative is that the rich don't pay their fair share, but here you are saying that even after the tax expenditures, the rich still pay most of the taxes.
Two big tax expenditures you did not mention...
Mortgage interest deduction: Pours gasoline on the fire of a housing market where supply is constrained due to restrictive zoning and other NIMBY inspired policies.
Tax exemption of employer health benefits: Perhaps well-intended but has the effect of tying us to our employers for a one-size-fits-all health plan that will get disrupted if we lose or change jobs. (and if I was already sick now I have a "preexisting condition"). Let me have a higher cash salary instead and I'll shop around for the health plan that best meets my needs and will stay with me if I change jobs.
The 1986 bipartisan tax reform lowered rates in exchange for closing loopholes. Capital gains was taxed as ordinary income. Since then, we have backslid to higher rates and more complexity.
Of course, the best "scorched earth" solution would be to replace all existing taxes with the Land Value Tax.
The rich can pay most income tax and still not pay their fair share. These are not contradictory positions.
I mentioned mortgage interest deduction in my example, and I talk about removing health insurance subsidies the article as well.
All existing taxes could not be replaced by an LVT assuming we want a similar or higher level of spending.
Can you talk a little more about “fair share?” From my understanding, the top 10% of earners pay over 76% of taxes and in comparison to most of our European counterparts, American tax system is extremely progressive
I'm making a conceptual argument. I don't think it follows from "the rich pay [most][a plurality] of [insert tax] therefore, they need not pay anymore." Of course, it *could* be the case the rich pay too much in tax, but I don't think we've hit that upper limit yet, especially not with the types of taxes I proposed in this series.
Regarding the claim that the rich in America pay a higher proportion of taxes than in Europe, that is in large part because U.S. income and wealth inequality is so high.
The second paragraph isn’t the reason. Europe genuinely taxes across the population distribution significantly more. I often wonder if people really understand the breadth of European taxes they have to sustain a welfare state.
The US could sustain probably 10% of gdp tax increase (it’s at 24% of GDP), and returning to the tax levels of the 90s is probs a start
I fully understand the breadth of the tax burden in Europe.
However, you might be under estimating the level of income and wealth inequality in the U.S. Europe at large, though I’d agree relative to Europe the U.S. has a less broad based tax code (which is bad).
I think wealth inequality in the US is often times over exaggerated in the sense that it’s pretax roughly the same as France, Germany, and the UK (https://ourworldindata.org/grapher/inequality-of-incomes-before-and-after-taxes-and-transfers-scatter?tab=table). The difference post taxes most maps out to the level of redistribution/taxes those countries do after the fact (which makes sense that the US would have a 25% higher post tax gini coefficient while also taxing roughly 25% less).
I think we both agreee we should raise taxes more on the wealth and expand the tax base but I’m not sure how you sell that politically
Not a bad idea!